Q2 2026 PDD Holdings Inc. Earnings Call Transcript
Key Points
- PDD Holdings Inc (PDD) reported a solid 8% year-over-year revenue increase to RMB112.4 billion in Q2 2026, driven by a 13% rise in transaction services revenue.
- The company's CNY100 billion support program is yielding tangible results, with merchants in industrial belts achieving significant gains in quality and efficiency, such as a cosmetics company in Guangdong reducing costs and launching patented brands.
- PDD Holdings Inc (PDD) is making strategic investments in supply chain and logistics, including the free shipping to villages program, which has established last-mile delivery networks across more than 10 provinces, unlocking demand in rural areas.
- The company is committed to enhancing platform governance, having introduced over 150 comprehensive trust and safety measures in June alone, which strengthens consumer trust and long-term ecosystem health.
- PDD Holdings Inc (PDD) maintains a strong cash position with RMB156.4 billion in cash and equivalents, and operating cash flow increased to RMB25.7 billion, providing ample resources for continued investment.
- The first-party brand model, though slower than expected, is progressing smoothly and is a clear long-term strategic priority, with a focus on core product categories and collaboration with manufacturers.
- PDD Holdings Inc (PDD) is actively adapting to global regulatory changes, such as EU customs duties, by accelerating local merchant onboarding and building local warehousing, which will strengthen supply chain resilience over the medium to long term.
- PDD Holdings Inc (PDD)'s net income declined 12% year-over-year to RMB27.2 billion, reflecting increased investments in platform and industry ecosystems that weighed on profitability.
- The initial rollout of the first-party brand model was slower than expected due to external factors, indicating potential execution challenges in this new initiative.
- Cross-border orders in affected markets, particularly the EU, will face lower fulfillment efficiency and higher costs in the short term due to new customs duties, which will have a considerable impact on parts of the business.
- Non-GAAP operating expenses increased 13% year-over-year, with R&D expenses up 40%, indicating rising cost pressures that could impact future margins.
- The company faces intense competition in the e-commerce industry, which places greater demands on platform governance and industry development, presenting ongoing challenges.
- PDD Holdings Inc (PDD) has chosen not to invest in quick commerce, which may limit its ability to capture shifts in consumer behavior toward same-day delivery, potentially affecting market share in certain segments.
- The company's heavy investment in supply chain and governance initiatives may not yield immediate results, and management acknowledges that building a healthier merchant ecosystem takes time, which could delay revenue growth.
Ladies and gentlemen, thank you for standing by, and welcome to PDD Holdings Inc. Second Quarter 2026 earnings conference Call. (Operator Instructions)
I would now like to hand the conference over to your host today. Sir, please go ahead.
Thank you, operator, and hello, everyone, and thank you for joining us today. PDD Holdings earnings conference -- earnings release was distributed earlier and is available on our website at investor.pddholdings.com, as well as through the Global newswire services.
Before we begin, I'd like to refer you to our Safe Harbor statement in the earnings press release, which applies to this call as we will make certain forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to GAAP measures.
Joining us today on the call are Mr. Chen Lei, our Co-Chairman and Co-Chief Executive Officer; Mr. Zhao Jiazhen, our Co-Chairman and Co-Chief Executive
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